Ellington contract situation a looming dilemma for Heat

• The fact Wayne Ellington has continued to prove to be a vital component on this Heat team has left Miami with a looming roster and financial conundrum:

Here are the Heat’s choices: Re-sign Ellington this summer and pay a luxury tax (an unappealing option for a team that isn’t considered a title contender); part ways with Ellington (that clearly would be damaging to this roster); or try to trade another player or players for less salary back to create room under the tax to keep Ellington.

Last season, the Heat was able to dump Josh McRoberts to fit Ellington under its cap. Finding a way to keep him without paying a tax will be far more difficult, an issue that likely will be pushed to the offseason.

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Ellington will have early Bird rights this offseason, which means the Heat -- already well over the projected cap - can surpass the cap to pay him 175% of his current $6.23 million salary, which would be a deal starting at $10.9 million next season.

He would be eligible for a four-year contract with annual raises of eight percent off the first year salary.

While it might not take that much to keep him, in a league that values shooting and floor-spacers, he’s bound to get a healthy raise.

Ellington stands fourth in the league in three-pointers with 150, is 28th in three-point percentage (40.7) and is averaging 11.5 points.

It’s clear Miami doesn’t want to lose him if his excellent work continues.

Erik Spoelstra speaks reverentially of his work ethic, conditioning, leadership, shooting and development of his overall game.

But here’s the problem: Miami has 11 players under contract for 2018-19 who are due $119.1 million - well over the projected $101 million cap and close to the projected $123 million tax threshold.

What’s more, that figure will increase by $1 million if Kelly Olynyk plays 1700 minutes, leaving the Heat at $120.1 million in commitments.

So say the Heat gave Ellington $10 million, pushing its payroll to $130 million. That would cost the team about $11 million in tax money (beyond his salary) if Miami kept the rest of its roster intact.

That would also make it highly unlikely that Miami would use either a $5.5 million taxpayer midlevel exception next summer or a full $8.8 million mid-level exception. A team using the full $8.8 million non-taxpayer midlevel cannot surpass the tax apron, which is $6 million above the threshold. It’s difficult to see the Heat using the exception without shedding salary.

Keep in mind that Miami’s 2018 first-round pick must be sent to Phoenix as part of the Goran Dragic trade unless it is in the top seven. The Heat also has no second-round pick, leaving minimum contracts, trades and that exception as the only avenues to improve this summer.

A payroll approaching $130 million – and a sizable tax bill - would be awfully hard to stomach for a team that isn’t a title contender. And that will lead to tough decisions, though it’s difficult to imagine Miami not keeping Ellington if he continues to play at this level.

Charlotte coach Steve Clifford told Hornets reporters last week that he made Ellington an example to his young guards.

“I think (his success) is a good testament to young players: What did he do? He worked, and he got a lot better,” Clifford said. “But in all aspects (he’s improved): He’s quicker, he’s stronger. He’s always been a terrific shooter, and now he plays at even a faster pace.

“You can just tell from what he’s done, this guy must be a great worker: Very professional, and he’s taken his strengths and made them even greater strengths. To this point, he’s been one of the big stories in the East.”

• For perspective, the Heat’s $119 million in cap commitments for 2018-19 (without the Olynyk bonus and Ellington) are fifth-most in the league, behind only Golden State ($128 million), Toronto ($125 million), Cleveland ($122 million) and Washington ($121 million).

• If the Heat is playing well just before the Feb. 8 trade deadline, Miami would look to make a trade only if an All-Star talent becomes available. Charlotte’s Kemba Walker – who’s reportedly available - isn’t the ideal match, because of Dragic’s presence and the Hornets’ desire to dump a bad contract with him.

The Heat wouldn’t look to make a lateral move if it’s playing well.

But we’re told Miami would be more active in trade talks if it’s playing poorly before the trade deadline.

• The Heat has given some thought internally to possibly converting Derrick Jones Jr.’s two-way contract into a standard contract after the Feb. 8 trade deadline but likely also will consider other options, including trades and buyout candidates, with the roster spot now held by center A.J. Hammons.

Jones has only six remaining days of available NBA service time under terms of his two-way contract, which is permitted to be converted into a standard contract at any time.